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The Salem area's real estate market is finally enjoying a robust recovery from the Great Recession, as companies expand into new office space, retailers add new locations and apartment builders raise new units. The takeaway message of the 2016 Commercial Real Estate Economic Forum Tuesday at the Salem Convention Center: Vacancies are down drastically, but there is still room and need for growth.

"Vacancies are down to the floor," said Curt Arthur, managing director of Sperry Van Ness Commercial Advisors LLC. "Rents are going through the ceiling."

Arthur and Jennifer Martin, a senior adviser at Sperry Van Ness, highlighted the signs of growth in the Salem area. A long-empty factory became fully occupied. Retail boomed in parts of South Salem and West Salem, and struggling strip malls found hope with new buyers.

"We're strong," Arthur said. "Any of us that are in the real estate business, whether it's brokerage, banking, construction, architectural, it doesn't matter. You are really, really busy right now."

South Salem reported a vacancy rate of 4.4 percent. Firehouse Crossing added a string of eateries along Commercial Street SE, and Martin anticipated a new gym, a national Chinese food chain and national Mexican food chain coming to the area surrounding the Northern Lights Theatre Pub.

Newly emptied buildings increased the vacancy rate downtown to almost 9 percent. Martin said she was excited to see the redevelopment of the recently closed Barrick Funeral Home. She wouldn't disclose any further details, but said she was nervous that the proposed use of the building would be met with "mixed emotions" by the community.

"Downtown is really poised to take a huge step forward," Martin said.

Across the river, West Salem reported the lowest the vacancy rate of 2.5 percent. Goodwill Industries is building a store on the corner of Wallace Road and Edgewater Street NW. The population of West Salem is disproportionately large compared to its retail availability, Martin said.

At almost 14 percent, North Salem and Keizer have the highest vacancy rate. Martin attributed the bulk of the empty sites to the shuttered Haggen store and partially occupied Schoolhouse Square in Keizer. With a BeFit gym set to open at Schoolhouse Square and new restaurants popping up at Keizer Station, the region may see a turnaround in its vacancy rate, she added.

Several recent store closings caused the vacancy rate in East Salem to rise to 11.4 percent, but the Lancaster Drive corridor still boasts a multitude of shopping outlets and eateries. St. Vincent de Paul Society is set to replace the former Tin Tin Buffet along Lancaster Drive NE.

Multifamily Housing

Salem's multi-housing market has continued to grow faster than the industry standard. With less than 500 available units, there is a housing need in the city as the vacancy rate stands at about 2.5 percent, Martin said. The multi-housing real estate market boomed in 2015 and garnered almost $70 million in sales volume.

"Retirees looking for simpler management of their living expenses and younger professionals looking for urban living are diversifying the rental market," Martin said in a statement.

The low supply and attractive financing packages are keeping prices high. About 900 units are expected to become available from 2016 to 2017, which should boost the vacancy rate to 4.8 percent.

Equitable Center, 530 Center St. Salem(Photo: Don Currie)

Office

The office real estate market lags behind retail and industrial growth because of the the lack of new construction, Arthur said. Sales volume dipped to only $7.5 million in transactions in 2015, the lowest in years.

However, vacancy rates, at 9.1 percent, are almost half of 2011 rates. Price per square foot has jumped from $78 to $132 in the same time period.

Arthur highlighted SAIF Corporation's $110 million renovation of its campus in downtown Salem. The renovation will start in April and continue until 2018. SAIF's High Street building will be completely renovated, its Church Street building with be demolished and its entire campus will be redone.

Arthur briefly mentioned the Park Front office building near Riverfront Park. The recently announced project is going to add a lot to downtown and further details should be announced in March, he said.

Industrial

Industrial leasing boomed in the past two years. There was more leasing activity in 2014 and 2015 than the previous five years combined.

Arthur warned of the possibility of a 2-million-square-foot industrial space in Woodburn. The land, along Interstate 5 near the Woodburn interchange, will be developed by Portland-based Specht Properties Inc. Arthur said the creation of this industrial space may have a "dramatic and far-reaching effect" on Salem's Mill Creek Corporate Center. He urged the local center to secure users before the Woodburn site is up and running.